RSBVL will hold a 50.1% stake in the JV with Sanmina owning the remaining 49.9%. RSBVL will buy new shares in Sanmina’s existing Indian manufacturing entity, Sanmina SCI India Pvt Ltd (SIPL), which will also manufacture gear for data-centres and cloud infrastructure, among others.
Sanmina will contribute its existing contract manufacturing business. As a result of the investment, the Reliance-Sanmina JV entity will be capitalised with over $200 million of cash to fund growth, the two companies said in a statement Thursday.
The transaction is expected to close by September 2022, subject to customary closing conditions, including regulatory approvals, the companies said.
Reliance Jio director Akash Ambani said the JV would tap significant market opportunities in the country’s high-tech manufacturing space.
“For both growth and security, it’s essential for India to be more self-reliant in electronics manufacturing in telecom, IT, data centers, cloud, 5G, new energy and other industries as we chart our path in the new digital economy,” Ambani, said in the statement.
Sanmina’s chairman Jure Sola said the joint venture will service both domestic and export markets.
Last October, SIPL was among the companies that qualified for sops under the government’s production-linked incentive (PLI) scheme for boosting local manufacturing of telecom network gear.
The government has recently set a target of $300 billion worth of electronics manufacturing in the country by 2026, compared with $67.3 billion in 2020-21. To encourage the industry to achieve this, it has launched several PLI schemes.
Some two years ago, RIL chairman Mukesh Ambani had said Jio had developed its own 5G technology, which would be ready for field deployments soon. He had then added that Reliance planned to offer its homegrown 5G technology to telecom companies across the world, after testing and scaling it in the Indian market.
“The day-to-day business will continue to be managed by Sanmina’s existing management team in Chennai, which will be seamless from an employee and customer perspective,” the two companies said in the statement.
The RSBVL-Sanmina JV will prioritise high-tech infrastructure hardware for growth markets, and across industries such as communications networking (5G, cloud infrastructure, hyperscale data centers), medical and healthcare systems, industrial and cleantech, and defence and aerospace segments.
The JV will also create a state-of-the-art ‘Manufacturing Technology Center of Excellence’ that will serve as an incubation hub to support product development and the hardware start-up ecosystem in India.